FORT WORTH, Texas, Aug. 11, 2011 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (Nasdaq:TLF) today reported financial results for the second quarter of 2011. Consolidated net income for the quarter ended June 30, 2011 was $1,076,000 compared to consolidated net income of $1,061,000 for the second quarter of 2010, an increase of 1%. Fully diluted earnings per share for the quarter were $0.11, compared to $0.10 in the second quarter of last year. Total sales for the quarter ended June 30, 2011 were $15.9 million, up 11% from $14.4 million in the second quarter last year.
Consolidated sales for the six months ended June 30, 2011 were $31.8 million, up 10% from the 2010 first half sales of $28.9 million. Consolidated net income for the first half of 2011 was up 11% at $2.2 million or $0.22 per fully-diluted share versus $2.0 million or $0.20 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $1.2 million in the second quarter, a 16% improvement over last year's second quarter. Seventy-seven stores comprised Tandy Leather's operations on June 30, 2011, compared to seventy-six stores a year ago. For the first six months of 2011, Retail Leathercraft's sales increased $2.3 million, or 15%, over the first six months of 2010. Second quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores and national account group, were up 4% or $223,000 from the same quarter last year. For the first six months of 2011, Wholesale Leathercraft's sales were up $356,000, or 3%, from the same period in 2010. International Leathercraft, consisting of one store located in the United Kingdom, reported a sales increase of 34%, or $133,000, compared to the second quarter of 2010. For the year, International Leathercraft's sales were up 33%, or $257,000, over the same period last year.
Consolidated gross profit margin for the current quarter was 61.8%, improving from 60.7% for the second quarter of 2010. For the first two quarters of this year, consolidated gross profit margin was 60.9%, decreasing from last year's gross profit margin of 61.1%. Consolidated operating expenses rose approximately 11% and 7% for the quarter and the year, respectively, $805,000 in the current quarter and $977,000 for the first six months over the same periods a year ago. For the second quarter, the significant increases in expenses occurred in employee compensation and benefits, legal fees, supplies, and freight out. For the year, expenses increases mirrored that of the second quarter. Consolidated operating margin improved for the quarter to 11.1% compared to 10.1% last year. On a year-to-date basis, consolidated operating margin improved from 10.3% last year to 11.6% in the current year.
Jon Thompson, Chief Executive Officer and President, commented, "We managed to get through the quarter with higher sales, compared to last year's second quarter, but only a minimal increase to earnings. Gross profit margins as a percentage of sales are still down for the year, but improved slightly for the second quarter. The balance between sales and gross margins is a challenging task, but I believe we were successful finding that balance in the second quarter. We expect the pressure on margins to ease slightly as we go through the last half of the year."
Chief Financial Officer and Treasurer, Shannon Greene, added, "Despite only a small increase in our second quarter earnings compared to last year's second quarter, we are in line with our internal targets. The second quarter expense increase is easily identifiable and unfortunately, not totally controllable. Our cost of employee health coverage is up this quarter, as are legal and professional fees. Further, some non-operating items, specifically foreign currency translation, interest income, and gas royalty income, hurt us this quarter. These five items, and the income tax associated with them, affected our second quarter earnings by approximately $400,000. That has a significant impact on earnings."
Tandy Leather Factory, Inc., http:/www.tandyleatherfactory.com">(http://www.tandyleatherfactory.com), headquartered in Fort Worth, Texas, is a specialty retailer and wholesale distributor of a broad product line including leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, saddle and tack hardware, and do-it-yourself kits. The Company distributes its products through its 29 Leather Factory stores, located in 19 states and 3 Canadian provinces, 77 Tandy Leather retail stores, located in 36 states and 6 Canadian provinces, and one combination wholesale/retail store located in the United Kingdom. Its common stock trades on the Nasdaq with the symbol "TLF". To be included on Tandy Leather Factory's email distribution list, go to http://www.b2i.us/irpass.asp?BzID=1625&to=ea&s=0">http://www.b2i.us/irpass.asp?BzID=1625&to=ea&s=0.
The Tandy Leather Factory, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7760
This news release may contain statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results and events may differ from those projected as a result of certain risks and uncertainties. These risks and uncertainties include but are not limited to: changes in general economic conditions, negative trends in general consumer-spending levels, failure to realize the anticipated benefits of opening retail stores; availability of hides and leathers and resultant price fluctuations; change in customer preferences for our product, and other factors disclosed in our filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Selected financial data:
| Quarter Ended June 30, 2011 | Quarter Ended June 30, 2010 | ||||||
|
Sales |
Operating Income |
Sales |
Operating Income |
||||
| Wholesale Leathercraft | $6,471,072 | $608,385 | $6,248,279 | $623,266 | |||
| Retail Leathercraft | 8,934,306 | 1,038,301 | 7,706,679 | 769,476 | |||
| International Leathercraft | 528,543 | 122,629 | 395,864 | 51,569 | |||
| Total Operations | $15,933,921 | $1,769,315 | $14,350,822 | $1,444,311 | |||
| Six Months Ended 06/30/11 | Six Months Ended 06/30/10 | ||||||
|
Sales |
Operating Income |
Sales |
Operating Income |
||||
| Wholesale Leathercraft | $13,191,781 | $1,418,439 | $12,836,083 | $1,157,462 | |||
| Retail Leathercraft | 17,583,458 | 2,040,602 | 15,322,975 | 1,692,214 | |||
| International Leathercraft | 1,037,722 | 222,762 | 780,302 | 131,003 | |||
| Total Operations | $31,812,961 | $3,681,803 | $28,939,360 | $2,980,679 | |||
| Wholesale Leathercraft | Quarter Ended 06/30/11 | Quarter Ended 06/30/10 | ||||
| # of stores | Sales | # of stores | Sales | |||
| Same store sales | 29 | $5,838,551 | 29 | $5,485,026 | ||
| Closed store | -- | -- | 1 | 83,203 | ||
| National account group | n/a | 632,521 | n/a | 680,050 | ||
| Total Sales – Wholesale Leathercraft | 29 | $6,471,072 | 30 | $6,248,279 | ||
| Wholesale Leathercraft | Six Months Ended 06/30/11 | Six Months Ended 06/30/10 | ||||
| # of stores | Sales | # of stores | Sales | |||
| Same store sales | 29 | $11,771,831 | 29 | $11,179,307 | ||
| Closed store | -- | -- | 1 | 172,099 | ||
| National account group | n/a | 1,419,950 | n/a | 1,484,677 | ||
| Total Sales – Wholesale Leathercraft | 29 | $13,191,781 | 29 | $12,836,083 | ||
| Retail Leathercraft | Quarter Ended 06/30/11 | Quarter Ended 06/30/10 | |||
| # of stores | Sales | # of stores | Sales | ||
| Same store sales | 76 | $8,924,874 | 76 | $7,706,679 | |
| New store sales | 1 | 9,432 | -- | -- | |
| Total Sales – Retail Leathercraft | 77 | $8,934,306 | 76 | $7,706,679 | |
| Retail Leathercraft | Six Months Ended 06/30/11 | Six Months Ended 06/30/10 | |||
| # of stores | Sales | # of stores | Sales | ||
| Same store sales | 75 | $17,405,991 | 75 | $15,227,973 | |
| New store sales | 2 | 177,467 | 1 | 95,002 | |
| Total Sales – Retail Leathercraft | 77 | $17,583,458 | 76 | $15,322,975 | |
| Tandy Leather Factory, Inc. | ||
| Consolidated Balance Sheets | ||
|
June 30, 2011 (unaudited) |
December 31, 2010 (audited) |
|
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash | $4,897,099 | $4,293,746 |
| Short-term investments, including certificates of deposit | 976,341 | 1,621,593 |
| Accounts receivable-trade, net of allowance for doubtful accounts of $72,000 and $147,000 in 2011 and 2010, respectively | 1,353,624 | 1,253,639 |
| Inventory | 20,260,247 | 20,236,028 |
| Prepaid income taxes | 56,749 | -- |
| Deferred income taxes | 287,239 | 307,509 |
| Other current assets | 1,354,223 | 1,056,201 |
| Total current assets | 29,185,522 | 28,768,716 |
| PROPERTY AND EQUIPMENT, at cost | 14,476,574 | 14,390,662 |
| Less accumulated depreciation and amortization | (4,269,432) | (4,106,121) |
| 10,207,142 | 1,284,541 | |
| GOODWILL | 994,669 | 990,368 |
| OTHER INTANGIBLES, net of accumulated amortization of $518,000 and $495,000 in 2011 and 2010, respectively | 210,784 | 232,416 |
| OTHER assets | 316,692 | 319,533 |
| $40,914,809 | $40,595,574 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| CURRENT LIABILITIES: | ||
| Accounts payable-trade | $1,498,195 | $1,247,821 |
| Accrued expenses and other liabilities | 3,025,483 | 4,893,236 |
| Income taxes payable | -- | 554,380 |
| Current maturities of long-term debt and capital lease obligations | 202,500 | 202,500 |
| Total current liabilities | 4,726,178 | 6,897,937 |
| DEFERRED INCOME TAXES | 840,392 | 628,543 |
| LONG-TERM DEBT, net of current maturities | 3,206,250 | 3,307,500 |
| CAPITAL LEASE OBLIGATION, net of current maturities | -- | -- |
| COMMITMENTS AND CONTINGENCIES | -- | -- |
| STOCKHOLDERS' EQUITY: | ||
| Preferred stock, $0.10 par value; 20,000,000 shares authorized; none issued or outstanding; attributes to be determined on issuance | -- | -- |
| Common stock, $0.0024 par value; 25,000,000 shares authorized; 11,150,065 shares issued at 2011 and 2010, 10,156,442 shares outstanding at 2011 and 2010 | 26,760 | 26,760 |
| Paid-in capital | 5,729,417 | 5,703,387 |
| Retained earnings | 28,656,267 | 26,429,335 |
| Treasury stock (993,623 shares at cost at 2011 and 2010, respectively) | (2,894,068) | (2,894,068) |
| Accumulated other comprehensive income | 623,613 | 496,180 |
| Total stockholders' equity | 32,141,989 | 29,761,594 |
| $40,914,809 | $40,595,574 | |
| Tandy Leather Factory, Inc. | ||||||||
| Consolidated Statements of Income | ||||||||
| (Unaudited) | ||||||||
| For the Three and Six Months Ended June 30, 2011 and 2010 | ||||||||
| THREE MONTHS | SIX MONTHS | |||||||
| 2011 | 2010 | 2011 | 2010 | |||||
| NET SALES | $15,933,921 | $14,350,822 | $31,812,961 | $28,939,360 | ||||
| COST OF SALES | 6,088,667 | 5,635,856 | 12,442,859 | 11,247,798 | ||||
| Gross profit | 9,845,254 | 8,714,966 | 19,370,102 | 17,691,562 | ||||
| OPERATING EXPENSES | 8,075,939 | 7,270,655 | 15,688,299 | 14,710,883 | ||||
| INCOME FROM OPERATIONS | 1,769,315 | 1,444,311 | 3,681,803 | 2,980,679 | ||||
| OTHER (INCOME) EXPENSE: | ||||||||
| Interest expense | 62,132 | 65,615 | 124,135 | 131,219 | ||||
| Other, net | 45,767 | (81,741) | 94,599 | (83,208) | ||||
| Total other (income) expense | 107,899 | (16,126) | 218,734 | 48,011 | ||||
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 1,661,416 | 1,460,437 | 3,463,069 | 2,932,668 | ||||
| PROVISION FOR INCOME TAXES | 585,060 | 399,327 | 1,236,137 | 923,981 | ||||
| NET INCOME FROM CONTINUING OPERATIONS | 1,076,356 | 1,061,110 | 2,226,932 | 2,008,687 | ||||
| INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | -- | -- | -- | 536 | ||||
| NET INCOME | $1,076,356 | $1,061,110 | $2,226,932 | $2,009,223 | ||||
| NET INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE: | ||||||||
| Basic | $0.11 | $0.10 | $0.22 | $0.20 | ||||
| Diluted | $0.11 | $0.10 | $0.22 | $0.20 | ||||
| INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX PER COMMON SHARE: | ||||||||
| Basic | $0.00 | $0.00 | $0.00 | $0.00 | ||||
| Diluted | $0.00 | $0.00 | $0.00 | $0.00 | ||||
| NET INCOME PER COMMON SHARE: | ||||||||
| Basic | $0.11 | $0.10 | $0.22 | $0.20 | ||||
| Diluted | $0.11 | $0.10 | $0.22 | $0.20 | ||||
| Weighted average number of shares outstanding: | ||||||||
| Basic | 10,156,442 | 10,191,506 | 10,156,442 | 10,164,759 | ||||
| Diluted | 10,168,098 | 10,238,217 | 10,175,561 | 10,226,015 | ||||
|
Tandy Leather Factory, Inc. Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2011 and 2010 |
|||||
| 2011 | 2010 | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
| Net income | $2,226,932 | $2,009,223 | |||
| Income from discontinued operations | -- | 536 | |||
| 2,226,932 | 2,008,687 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities- | |||||
| Depreciation & amortization | 497,351 | 471,410 | |||
| Loss on disposal of assets | 79,035 | 8,553 | |||
| Non-cash stock-based compensation | 26,030 | 18,388 | |||
| Deferred income taxes | 175,370 | (82,823) | |||
| Other | 117,789 | (52,842) | |||
| Net changes in assets and liabilities: | |||||
| Accounts receivable-trade, net | (99,985) | (195,779) | |||
| Inventory | (24,219) | (1,244,465) | |||
| Income taxes | (554,380) | (406,926) | |||
| Other current assets | (298,022) | (1,063,029) | |||
| Accounts payable | 250,374 | 517,249 | |||
| Accrued expenses and other liabilities | (1,867,753) | 383,085 | |||
| Total adjustments | (1,698,410) | (1,647,179) | |||
| Net cash provided by continuing operating activities | 528,522 | 361,508 | |||
| Cash provided by discontinued operating activities | -- | 6,831 | |||
| Net cash provided by operating activities | 528,522 | 368,339 | |||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
| Purchase of property and equipment | (497,485) | (238,756) | |||
| Purchase of certificates of deposit | -- | (2,572,593) | |||
| Proceeds from maturities of certificates of deposit | 645,252 | 5,086,000 | |||
| Proceeds from sale of assets | 25,473 | 6,560 | |||
| Decrease (increase) in other assets | 2,841 | (1,612) | |||
| Net cash provided by continuing investing activities | 176,081 | 2,279,599 | |||
| Cash provided by discontinued investing activities | -- | -- | |||
| Net cash provided by investing activities | 176,081 | 2,279,599 | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
| Payments on long-term debt and notes payable | (101,250) | (101,250) | |||
| Repurchase of common stock (treasury stock) | -- | (8,419) | |||
| Proceeds from issuance of common stock | -- | 166,466 | |||
| Net cash (used in) provided by continuing financing activities | (101,250) | 56,797 | |||
| Cash provided by discontinued financing activities | -- | -- | |||
| Net cash (used in) provided by financing activities | (101,250) | 56,797 | |||
| NET CHANGE IN CASH | 603,353 | 2,704,735 | |||
| CASH, beginning of period | 4,293,746 | 7,891,962 | |||
| CASH, end of period | $4,897,099 | $10,596,697 | |||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||
| Interest paid during the period | $124,135 | $131,219 | |||
| Income taxes paid during the period, net of (refunds) | 1,471,101 | 1,405,089 | |||